The Stride Rite Corp. (SRR)

Striding right!!

Stride Rite designs, markets and distributes footwear primarily under the brands Stride Rite, Keds, PRO-Keds, Sperry Top-Sider, Tommy Hilfiger, to name a few. Offerings include children’s footwear as well as athletic and casual footwear for children and adults. The company’s products are primarily for consumers between the ages of six months and ten years and sold through departmental stores, shoe stores, specialty stores and websites in the US, Canada and Europe.

Stride Rite saw a top-line growth of 20% in fiscal 2006 due to the effect of acquisitions and success in the international market. On a negative side, Keds business that contributed over 20% in 2005 saw a decline in 2006. However, in a pursuit to expand internationally, the company is taking initiative to focus on the Keds business, taking account of the increasing demand for youth oriented products.

Post the acquisition of Robeez, Stride Rite will enhance its distribution channel as Robeez has over 5000 stores spread all over. Following the same, its fourth quarter turnover improved 15%. Looking ahead, this acquisition will also expand the foothold of the company in their target segment as the company senses further opportunities in Europe and US. Saucony that was acquired last year is delivering good performance and the management has plans to expand its international presence.

As the footwear industry is subject to rapid changes in consumer trends, Stride Rite is planning to launch several sports related footwear in 2007 like River, Cohesion and Excursion, which could drive sales. Interestingly, Stride Rite is shifting its focus to youth and athletic oriented products and the strategy is working well for the company. Hence, considering the one-year perspective, the stock price should go up.